Trump’s “win-win” for the ethanol leaves refiners out in the cold

Source: By John Siciliano and Josh Segel, Washington Examiner • Posted: Monday, June 3, 2019

 The Environmental Protection Agency on Friday made year-round sales of 15% ethanol legal, while leaving out provisions that the president promised would address price concerns raised by oil refiners.

The EPA action to allow E15 sales in the summer months was met with praise by farming groups and the ethanol industry, while lobbyists for refiners were less than thrilled.

“The President promised that the move to allow greater summertime ethanol use would be coupled with serious market reforms for the [ethanol credit] compliance program,” said the Fueling American Jobs Coalition, which represents refineries.

The coalition said the E15 rule, without enacting reforms to the ethanol credit market, clearly violates the spirit of President Trump’s deal and could harm the livelihoods of refinery workers, who will bear the brunt of higher credit prices.

The EPA cut out the more aggressive aspects of its original proposal to track the ethanol credit market, which was part of the original E15 proposed rule. Inclusion of the measures were part of a “win-win” deal worked out by the Trump administration between the refiners and the ethanol industry, meant to ensure that prices for the ethanol credits are kept in check.

The credit prices had experienced volatility in recent years, raising the cost for refiners to comply with EPA’s Renewable Fuel Standard that requires them to blend billions of gallons of ethanol into the market each year.

Market reforms not ready for prime time: Industry experts said some of the aspects of EPA’s original proposal to monitor for market volatility were not ready for prime time. EPA did approve two of the less contentious aspects of the market plan in Friday’s rulemaking.

EPA air office chief Bill Wehrum told reporters on a call that most of the market proposals were removed from the final rule for one simple fact: “We have not found any clear evidence of market manipulation.”

Coming court battle: The ethanol industry, meanwhile, celebrated the rule as a major win for corn farmers and renewable fuels, despite the fact that they may face a court battle over EPA’s actions.

The American Petroleum Institute has warned for months that allowing year-round blending of 15% ethanol oversteps the limits put in place by the Clean Air Act, and is essentially illegal. It also places consumers at risk of misfueling by filling up with E15, which could damage their engines.

“EPA has acted outside its statutory authority in granting year-round E15 and rushed through the rulemaking process in order to meet an arbitrary deadline,” said API Vice President of Downstream and Industry Operations Frank Macchiarola. “This premature policy attempts to push E15 into the market before it is ready.”

Wehrum told reporters that the rule is based on a rock-solid legal foundation, in which the agency firmly believes it has the authority to waive previous restrictions on E15 to allow its sale during the summer driving season.

The summer driving season officially kicks off on Saturday, June 1.